The seven secret thieves
Posted by Faith, 26 November 2009
One of my clients looked very shocked when I advised him to stop stealing.
"I would never steal!" Elliot protested.
"But you do, each and every day!"
Then I reassured him, "I don't mean that you steal from others, but you pick pocket your own wallet."
Elliot had recently split up from his wife and was finding it hard to survive on one income. We'd had an initial discussion on where he spent his money and I asked him to jot down his expenses as we ticked them off. He knew what he paid for rent and groceries, was a little vague on his costs for electricity, petrol and insurance and had no idea what he spent on leisure activities.
At the end of this discussion, Elliot stared in disbelief at the large amount of money that should have been left over. We spent another 5 minutes reviewing the list, but still ended up with a significant sum that he couldn't account for.
This is why I had suggested that he was stealing his own hard earned money. The seven biggest "pick pockets" maybe small, but they secretly steal "big time":
- Lunches/meals out/coffee
- Holidays and outings
- Shopping
- Insurance
- Energy – electricity, gas
- Telecommunications
- Transport
1. Lunches/meals out/coffee: Elliot could save over $4500
The idea was not to cut out all pleasurable eating and drinking. Like anyone else, Elliot was entitled to some treats in life. However, he agreed he could have both treats and save money, by making the following changes:
- Take a homemade lunch to work at least twice a week (or more often) instead of buying it. Saving: 2 x $7 = $14 per week = $728 per year
- Reinvent hospitality at home, instead of always in cafes and bars. Elliot enjoyed cooking, particularly in the weekends and could make a fabulous batch of scones, which he'd learned from his grandmother. He decided to:
- invite friends to his home at least once per month, rather than eat out every weekend. Saving: $100 per month = $1200 per year
- make home made takeaways on Friday nights – Elliot decided that he could teach his single mates how to make burgers and pizzas at home, which would be cheaper and better than buying them. They could take turns to host and each bring a few beers. Saving: $30 per week = $1560 per year
- Drink one less café coffee per working day. Saving: $3.50 x 5 = $17.50 per week = $910 per year
- Cook up or use everything in his pantry and freezer, which had been bought by his ex-wife but had not been used and was now approaching its expiry date. Elliot thought that he would save the equivalent of one week's grocery bill ($200).
2. Holidays and outings: Elliot could save $'000's
Elliot and his wife (Sheena) had migrated to New Zealand from Scotland. After 3 years he loved the place, but Sheena was homesick for Scotland. They had racked up a lot of air travel going back and forth to Scotland to find a solution that suited them both. In the end, the only answer was to split up. Elliot now had the chance to explore his adopted home on his holidays instead of always paying for expensive overseas travel. Holidays in NZ would also avoid the need for costly travel insurance and money exchange expenses.
He was looking forward to sampling more of NZ's great outdoors:
- swimming at the beach
- camping in the summer
- day walks and overnight tramping
- cycling
3. Shopping = saving $'000's
Because of Sheena's unhappiness, she and Elliot had often bought consumer items and luxuries in the hope she would feel better. Elliot told me that, once she returned home from the shopping trips, she usually didn't bother to unwrap the goods. Shopping can't cure sadness or dissatisfaction with life. Other action is needed for that, as Sheena eventually discovered.
Elliot decided to:
- Try supermarket "home brands" when shopping. Top brand manufacturers often produce the Pam's and Signature brands – all that is different is the label, so he felt he need not pay more just for a fancy brand name.
- Save up for any consumer items he needed, instead of going into debt for them. By doing the calculations with me he learned that if he saved more, he'd always have MORE money in the longer term. He was surprised that he could pay more than double the purchase price if he borrowed money to buy, due to the interest costs.
4 – 7 Insurance and utilities = saving $'00's
I reviewed the other "pocket robbers" with Elliot, arranged a more suitable insurance package for him, and suggested ways he could obtain better pricing and deals by negotiation with the many providers in the following sectors:
- Energy – electricity and home heating
- Telecommunications
Elliot also considered different transport options for getting to work and leisure activities, making errands and taking short breaks.
He discovered that a private car is not the only way to travel. Taking the bus or train to work, particularly with the concession fares, was a lot cheaper than driving (and parking) and could take the same amount of time or less.
For his exploration trips around New Zealand he found that the airlines offered great fares for short breaks and it was often more economical to fly than to drive.
On his next appointment with me, Elliot was delighted with how easy and positive the process had been. He said, "You know, Faith, my granny was right all along. She used to say: Many a mickle makes a muckle!"
"A what?"
"It means wee things (mickles) can add up – whether good or bad. A muckle is a Scots word meaning great or large."
"Our grandmothers knew a lot about making ends meet. Mine used to say: Look after the pennies and the pounds will look after themselves."
Now that Elliot had money available for fun as well as saving, we worked out a plan to help him achieve what he wanted in the future:
- His own business (something he had felt too unsettled to do in the past)
- His own home
- A superannuation fund
- An emergency fund to cope with anything unexpected, including a dash to Scotland in case of illness of his parents and siblings.
Learning with Faith:
- Prepare a budget so you know exactly what you spend your money on. If you are having trouble living on your income and want more money, you will know where to make changes.
- Prioritise your spending on what you really want to do with your life
- Shopping won't cure unhappiness
- Many a mickle makes a muckle – wee things can add up to a big huge sum.
Need more help? Check out:
- The secret of wealth
http://www.keepingthefaith.co.nz/financial_planning_faith_blog_150509.cfm
Buy my new book Faith Speaks Money Talks to discover how to:
- Decide what is important to you
- Get a better life with the 7-week money challenge
- Smash the spending habit so you have more money for what you really want
- Stop money pouring out of your life
- Handle the big money decisions with ease
- Buy property with confidence and without going broke
- Make the most of KiwiSaver
See previous blogs:
Don't sweat the small stuff.
Can you grow a money tree?
What's holding you back?
Money or your life - which has more value?
The seven secret thieves
Five questions to change your life
Find that spark
Switching lives - what would you choose?
Who can I trust to help grow my money?
How to swim in a sea of money
Life can be unfair
The rule of happiness
No way to live
Anyone can be good with money
Best ways to warm up winter
Who wants to be a millionaire?
The secret of wealth
Keeping your money safe
Having it all
Win an all-expenses-paid trip for two to Europe (Part 3)
Win an all-expenses-paid trip for two to Europe (Part 2)
Win an all-expenses-paid trip for two to Europe (Part 1)
Make a change for good
A recipe for a happy Christmas
Nothing else matters
Rage, rage against the dying of the light
Make a wish come true
Buying or Selling a House – Those that care least, usually succeed
When is a good time to buy a house?
Sleepless Nights in a War Zone
Transitions - more life or more of the “same old, same old” boring stuff?